A family of simple paternalistic transfer models

Andras Simonovits ()
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Andras Simonovits: Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences also Mathematical Institute, Budapest University of Technology, and Department of Economics, CEU

No 1324, CERS-IE WORKING PAPERS from Institute of Economics, Centre for Economic and Regional Studies

Abstract: A general framework is analyzed which contains several special transfer (tax and pension) models. In our static two-overlapping-generation framework, every individual works in the first stage of the adult age, while is retired in the second. The government operates a balanced linear transfer system, sometimes with caps. In the models, the individuals may optimize their situation in various ways: contributing to voluntary pension, restraining labor supply and underreporting wages. Individuals are typically short-sighted, therefore they choose paternalistically suboptimal decisions. The models provide useful information on the socially optimal paternalistic transfer system.

Keywords: tax systems; pension systems; pension models; overlapping generations; paternalism (search for similar items in EconPapers)
JEL-codes: H24 I31 J22 J26 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-08
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